Tesla Tanks After Goldman Downgrades to Sell

https://www.bloomberg.com/news/articles/2017-02-27/tesla-slumps-in-premarket-trading-as-goldman-downgrades-to-sell

by sillypuddy • 9 years ago

97 82 9 years ago

bloomberg.com

M_Grey2• 9 years ago

IIRC wasn't there just a debate here on HN about the wisdom of shorting Tesla stock?

angstrom• 9 years ago

There's also a fitting debate about blindly follow GS.

M_Grey2• 9 years ago

I can't imagine that anyone would be so foolish as to do that today, even if they had been so inclined years ago.

eip• 9 years ago

Just sold some TSLA puts for a 130% gain. Not sure if it was wise but don't care.

idiot_stick3• 9 years ago

Yeah, the top comment on the last article was some schadenfreude filled piece talking about "shorts losing their shirts". Stock is down almost 10% since then.

KirinDave• 9 years ago

It is almost like there is a secondary agenda here. It's difficult to see how anyone arrived at these conclusions.

hodder• 9 years ago

Tesla investors are learning a hard lesson that just because a company is cool and makes amazing products, that does not make it a buy at any price. There is almost no way to justify the current valuation and Goldman is simply reiterating that.

I have a really nice coffee mug in front of me right now. Best mug I've ever used. Is it worth 1200 dollars? No.

Price matters.

pseudometa• 9 years ago

But if I got 400000 preorders for that $1200 mug?

mikeash2• 9 years ago

With a market cap of about $40 billion, I don't think they're learning that yet.

If the price drops to reflect something vaguely resembling the company's current size, rather than wild dreams of massive growth, then they might be learning that. But the current price is still way high if you just look at the present or even the near future.

shanemhansen• 9 years ago

TSLA is up over a 5 year period, a 1 year period, and 25% in the last 3 months alone. As far as I can tell the only people who learned a hard lesson were those who bought in the last week or so. I believe the lesson they learned is: past performance does not guarantee future results.

cryptozeus• 9 years ago

5% down != tanks

trimbo• 9 years ago

11% since earnings.

tommynicholas• 9 years ago

5% drop after a 30% rally is "tanking"?

Tesla stock will always be volatile it's fine. Stock was under $200 a few months ago.

elmar2• 9 years ago

October 7, 2016

Elon Musk dumped by Wall St’s Goldman, Morgan now that he really needs them

http://www.biznews.com/global-investing/2016/10/07/elon-musk...

mikeash2• 9 years ago

Yeah, it's a pretty weird headline. The last time TSLA was this low was six whole weeks ago.

ogezi• 9 years ago

I agree. Tesla stock has had a wild ride over the years but it has generally gone up. BI wrote this article about it http://www.businessinsider.com/tesla-year-in-review-again-20....

elmar2• 9 years ago

Anyone knows the status of these loans?

Elon Musk Is Borrowing Another $150 Million From Goldman Sachs To Buy More Tesla Stock (2013)

http://www.businessinsider.com.au/elon-musk-borrows-150-mill...

jacquesm• 9 years ago

This is just Goldman trying to get better terms for their loan.

idiot_stick3• 9 years ago

This is just Goldman trying to get better terms for their loan.

In the vaunted halls of Silicon Valley, maybe. But people in the finance world are starting to wonder if this thing can hold up. Others have been wondering for a while.

exhilaration• 9 years ago

I wish it would "tank" a little further so I could buy some shares.

alexro• 9 years ago

If you like to risk buy Bitcoin instead. None of the Bitcoin buyers who held on the investment ever lost money.

thefalcon2• 9 years ago

Assuming you had control of your wallet vs Mtgox etc.

rhino369• 9 years ago

You can say that about any "investment" currently at an all time high.

jlgaddis• 9 years ago

I bought $11,000 USD worth of BTC at $7. I sure wish I had held on to it.

JumpCrisscross3• 9 years ago

Tesla went public on 29 June 2010 [1]. Since then, it has traded 1,677 days. It's average (median) movement, from open to close, is -0.01% (-0.09%). There have been 50 days when Tesla stock fell at least 5% and 53 days where Tesla stock rose at least 5%. So about 6% of the time, historically, it's "tanked" or "boomed" by a similar amount. (By coïncidence, the average >=5% movement is +7.452% while the average <=5% movement is -7.458%.)

Note: this is not a traditional presentation of volatility. Its point is to narrate, not power trades.

---

So what should you be looking at? One, there is heavy bearish sentiment around Tesla, representing about 30% of its float [2]. Short interest ratio "is the ratio of tradable shares being shorted to shares in the market" [3].

Two, Musk's reality-distortion field just faltered. None of Musk's companies have ever been realistic about timelines. But having a Goldman Sachs analyst publicly counter Tesla just a week after "Musk said the firm’s new vehicle is on schedule to arrive in July" is a new level of assertiveness.

This is salient given Tesla's short-term need to raise boatloads of money. I'd keep an eye on Musk positioning back-ups to Wall Street through political channels, e.g. low-cost 'infrastructure' or 'domestic manufacturing' financing and/or government contracts, while he repairs his warp field.

[1] https://en.wikipedia.org/wiki/Tesla,_Inc.#IPO_and_Model_S

[2] http://shortsqueeze.com/?symbol=tsla&submit=Short+Quote™

[3] https://en.wikipedia.org/wiki/Short_interest_ratio

Disclaimer: this is not investment advice. Please don't be a numpty and trade based on Internet comments.

johan_larson• 9 years ago

I wonder why Bloomberg didn't try to put this drop into perspective, somehow. Surely there are traditional measures of volatility, and they could have presented those. Why didn't they?

The simple answer is that bold statements grab more eyeballs, I suppose. But is that all there is to it?

slackstation• 9 years ago

Because news agencies make money from attention not accurate and usable information. Also, financial market movement has so many factors that govern their movement, that in the short term it looks random but, peoples' daily need for news forces them to put a narrative to almost random short term moves.

Now this movement seems clear but, I can't know and verify for sure unless I have a representative sample of trader sentiments to know why they chose to buy or sell the stock that day.

frgtpsswrdlame3• 9 years ago

Once people realize that the self-driving dream won't be taking place anytime in the foreseeable future, I'd expect another big drop.

gr3yh47• 9 years ago

i'd say the next 5-10 or even 20 years certainly falls under the 'forseeable future'

frgtpsswrdlame3• 9 years ago

i'd say the next 5-10

And I'm gonna say you're delusional.

The thing I'm really curious is about how much of Tesla stock is self-driving hype? I still believe in electric cars. Also will Elon's web of companies come crashing down when progress on the self-driving front starts to falter?

Drumlin• 9 years ago

I think counting it in decades rather than years is more realistic. So many major innovations are described as being in the next ten years.

If you look at VR, which I think is simple in comparison, you could have experienced it in a high end 90s arcade. It is only now starting to become a mass produced product.

In my view, the current self driving cars look like where VR was before they turned the technology into arcade machines.

OliverJones• 9 years ago

Wall Street really doesn't like companies doing things with a promised payoff beyond the present fiscal year. That's what they're doing at TSLA. Sure, a lot of it ("Gigafactories!!!!!") is ego driven, not economy-of-scale driven. But they will need the manufacturing capacity as electric storage becomes more common.

Don't forget, TSLA is an energy company. Their present products have wheels because rich dopes like me will spend money on them, and because there's some low-hanging fruit in transportation energy in this decade (not this fiscal year).

But long term their products are going to be as ubiquitous as household electric meters and just as boring.

If I had a bunch of shares of TSLA and a kid entering college, I might sell some of them at the present price. But that doesn't make them a bad investment.

JumpCrisscross3• 9 years ago

Wall Street really doesn't like companies doing things with a promised payoff beyond the present fiscal year

The same Wall Street valuing Tesla at $40bn [1]? Tesla is a loss-making company valued at almost 6 times revenues on the promise of profits in many years' time.

[1] https://www.google.com/finance?q=tsla&ei=yVy0WNmON8bfsgHYiIm...

idiot_stick3• 9 years ago

Don't forget, TSLA is an energy company.

Boy are people going to have to do some explaining if Tesla winds down Solar City, which I see as a major possibility.

But long term their products are going to be as ubiquitous as household electric meters and just as boring.

I'd love to know how people are so confident that it's going to be Tesla that wins this. This isn't Tesla vs GM, Tesla vs Toyota, Tesla vs Ford; it's Tesla vs Everyone. If you were betting, you would really bet on Tesla vs one of about 15 other, huge companies in pool? That seems insane to me.

djrogers2• 9 years ago

if Tesla winds down Solar City

Why would they wind down a profitable financing arm of the company? Auto makers get a huge chunk of their revenue from financing, as do solar lease companies. Lots of synergy there, and just about zero downside to continuing Solar City operations.

mjgoeke• 9 years ago

Part of me really wants to read this headline as - "Tesla retaliates with heavy armored vehicles after creditor denounces them to the public"

ChicagoDave• 9 years ago

I'm not generally a conspiracy theorist, but Trump is friends with the oil & gas industry, Tesla and the gigafactories are a direct threat to that industry, and GS is embedded deeply in this administration.

Tesla is doing what we as a world should be promoting, that is to stop pushing oil & gas exploration and pushing sustainable energies.

There is an energy war. Tesla is doing better than anyone expected from a science perspective. There is a lot of money at stake in oil, gas, coal, and electricity (in its current form).

I expect this administration to drop the EC subsidies at some point, but retain the O&G exploration subsidies.

The Koch brothers are probably somewhere in this mix as well.

michaldudek2• 9 years ago

It baffles me how all these smart people completely don't get Elon or Tesla.

Maybe it's hard to understand for some that money is not the ultimate motivator? I'm pretty sure that Tesla could be a profitable company today if they stopped all investments and just focused on selling amazing Model S (who needs AP2?) (best car ever made in opinion of many reviewers!). But they're a tech company that happens to make cars (among many other things), not a traditional car company. That's why they should be valued at tech company criteria. They're doing what all the tech "unicorns" are doing - burning through cash by investing in stuff that will give them massive advantage in the future. Why profit when you can grow massively? (hello Gigafactory! hello Solar City!)

Sure, I can see how this is not a company to invest in during daily trade. But it's not a company that ever said it's in it for the quick buck. 10 years ago it was failing in delivery of Roadster. 5 years ago it was failing in delivery of Model S and 2 years ago it was failing in Model X. If you ask me, I'd love to fail on the scale Elon and Tesla fail. Unless something really really random happens, Tesla is not going down anytime soon. Sure, M3 is risky, Solar City deal might be iffy, but I think some of the smartest people in the world are running this company, they're not gonna flip it.

I mean, a chat app aims to be valued at $25bn vs a company that delivered almost 200k feats of engineering in the last 10 years and everyone is laughing at their current valuation of $40bn. What is wrong with the world?

dragonbonheur• 9 years ago

People who work for Goldman aren't that smart - they're just greedy career-diggers who just look for a quick buck. Just google the mountain of lies that was Spinvox.

exclusiv• 9 years ago

Maybe it's hard to understand for some that money is not the ultimate motivator?

Except that's the whole point of the market. Companies have a fiduciary responsibility to their shareholders. The company has to be motivated by money and growth. Maybe they'll pump out dividends. Maybe they'll take over the world first like Amazon and then pump out tons of cash. Either way - it still always boils down to money.

If a company doesn't care about money, they can be taken over. Their stock price can suffer. Going public means you've decided to be scrutinized. For better or worse.

nikdaheratik• 9 years ago

If you're planning on holding onto the stock long term, the best advice is to just ignore this and ride it out.

The issue is that mass market auto making is hard, it's intensely regulated, and it has a large potential to cost alot of money to build a factory, acquire the parts you need, and handle any liability issues. Their job is to be skeptical and that makes sense as they're lending out billions of dollars to a company that's going to need tens of billions to get everything working.

ww520• 9 years ago

Amazon had its up and down. See where it has gone today, dominating in multiple areas, while barely profitable.

mncolinlee• 9 years ago

As a tech company, Tesla has never delivered a product on time. Worse, it's usually 2-3 years late, not the usual 3-6 months delay for software. At this moment, GM beat the Model 3 to market with its cheaper competitor by at least six months and at industry scale.

Now, bear in mind, I'm an early stage Tesla investor. I bought Tesla at $38 and sold them at $150. I felt they were beyond fairly priced at $150 before they unveiled any self-driving tech. So I've been ignoring financial industry naysayers for years.

My take on Tesla is this: this moment is do or die for the company. It's fine to be six months late or even a year late if they launch the Model 3 with full autonomous driving capability at a price affordable to the upper-middle class. But more could be fatal. Several major competitors are nipping at their heels concerning both EVs and autonomous cars, including GM, Nissan, and BMW among others.

The one best thing going for Tesla is their sterling reputation with consumers. Geeks believe that their cars are magic spaceships and are willing to wait unbelievably long times to own one. Their brand reputation is better than Apple. They must deliver quality and not rush production just to meet the Bolt EV in the market.

lutusp• 9 years ago

This narrative explains why there can be no "winning strategy" in equities investment (apart from investing in an index fund). The widely followed analysts who recommend selling TSLA shares based on what they expect to happen, make their prediction come true by speaking publicly (an "announcement effect") -- compare the rate of change in the stock price when the "experts" aren't offering their advice to the public.

It also builds the reputation of the analysts -- the more correct calls they make, the more wise they seem. The more wise they seem, the more the public follows their advice. The more the public follows their advice, the more "correct" calls they seem to have made.

The real winners are those who make their moves the day before the experts speak, which is why insider trading is illegal.

http://arachnoid.com/equities_myths/

nodesocket• 9 years ago

I wouldn't call it tanking. I'd say correction. Since Dec 2nd, $TSLA has been up over 40%. Today's action brings it down to up 35%.

https://www.google.com/finance?chdnp=0&chdd=0&chds=1&chdv=0&...

Tesla Tanks After Goldman Downgrades to Sell

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